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China Is Now The World’s Largest Importer Of Oil - What Next?

Tyler Durden's picture




 

Submitted by Rory Johnson via OilPrice.com,

Last month the world witnessed a paradigm shift: China surpassed the United States as the world’s largest consumer of foreign oil, importing 6.3 million barrels per day compared to the United States’ 6.24 million. This trend is likely to continue and this gap is likely to grow, according to the EIA’s October short-term energy outlook. Wood Mackenzie, a leading global energy consultancy, echoed this prediction, estimating Chinese oil imports will rise to 9.2 million barrels per day (70% of total demand) by 2020.

World Liquid Fuels Consumption

This trend has been driven by a combination of factors. Booming American oil production, slow post-recovery growth, and increasing vehicle efficiency have all served to reduce crude imports. In China, however, continued economic growth has brought with it a growing middle class eager to take to the road. While the automobile market had cooled earlier this year, September saw sales rise by 21%—a trend that is putting increasing strain on China’s infrastructure and air quality in addition to oil demand.

Some of the world’s largest traffic jams are now commonplace in major Chinese cities, and air quality issues have pushed authorities to pursue synthetic natural gas technology to offset the need for coal-fired electricity. Increasing oil consumption will only serve to exacerbate these issues.

Furthermore, the per capita consumption differential between the two countries is still vast, with an average Chinese citizen consuming a mere 2.9 barrels of oil per year compared to an average American who consumes 21.5. This indicates that China’s growing thirst for oil isn’t going to slow down anytime soon.

So what does this shift in oil imports mean?

More than anything else, it is a sign that China will increasingly depend on global markets to satisfy its ever-growing oil demand. This necessitates further engagement with the international system to protect its interests, encouraging a fuller integration with the current liberal order. This will have effects on both China’s approach to its currency and its diplomatic demeanour.  

Derek Scissors wrote last week that this shift might usher in a world where oil is priced in RMB as opposed to solely in USD. This transition could only occur, however, if the RMB was made fully convertible and Beijing steps back from its current policy of exchange rate manipulation. Earlier this year, HSBC predicted that the RMB would be fully convertible by 2017, a reality that is surely hastened by its position as the single largest purchaser of foreign oil. A fully convertible RMB would be a “key step in pushing it as a reserve currency and enhancing its use in global trade, said Sacha Tihanyi, a strategist at Scotia Capital.

On the diplomatic side, while the United States is unlikely to withdraw from its role as defender of global oil production or guarantor of shipping routes, an increasing reliance on foreign oil will push Beijing toward a more engaged role within the international community. It is likely that we will see a change in Beijing’s approach to international intervention and future participation in multilateral counterterrorism initiatives—anything to ensure global stability. In the future, anything that destabilizes the oil market will increasingly harm China more than the United States. While Beijing views this increased import reliance as a strategic weakness, it a boon for those hoping to see Beijing grow into its role as a global leader.

Bottom line: as Chinese oil imports grow, Beijing will become increasingly reliant on the current market-oriented global system—this is nothing but good news for those that enjoy the status quo.

 

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Mon, 10/21/2013 - 21:35 | 4078023 ebworthen
ebworthen's picture

What next?

Why...Renminbi (Yuan) as reserve currency of the world of course.

Mon, 10/21/2013 - 21:38 | 4078037 LetThemEatRand
LetThemEatRand's picture

So long as the U.S. has Saudi Arabia's back with its insanely superior military, I don't see this change occurring.  The whole basis for the petro dollar is American military might keeping the Saudi royals knee deep in hookers and blow.

Mon, 10/21/2013 - 21:45 | 4078058 BrocilyBeef
BrocilyBeef's picture

The Saudi royals love three things: Hookers, Blow and Wahabi Peas. 

 

Mon, 10/21/2013 - 21:49 | 4078071 Manthong
Manthong's picture

Next?

Bend over and prepare to be lubed.

Mon, 10/21/2013 - 21:52 | 4078079 BrocilyBeef
BrocilyBeef's picture

Mom?

Mon, 10/21/2013 - 22:01 | 4078122 dryam
dryam's picture

We are past peak cheap oil.  We are fucked.

Mon, 10/21/2013 - 22:24 | 4078191 SWRichmond
SWRichmond's picture

This transition could only occur, however, if the RMB was made fully convertible and Beijing steps back from its current policy of exchange rate manipulation.  

So being a currency manipulator excludes one from hosting a reserve currency?  Since when?

Mon, 10/21/2013 - 22:31 | 4078214 fourchan
fourchan's picture

lets thank nixion and kissinger for getting rid of all our jobs, building up red china

and doubling our gas prices by doubling the consumption of oil by the world.

 

america got buttfucked as ross peroit tryied to explain, americans should wake the fuck up to this treason.

Mon, 10/21/2013 - 22:56 | 4078277 smlbizman
smlbizman's picture

how about an updated chart of the electrical use, been awhile....i liked that one the best...is the oil use showing up there?

Mon, 10/21/2013 - 23:01 | 4078292 markmotive
markmotive's picture

Next? THIS is what happens next: http://www.planbeconomics.com/2013/10/super-smog-hits-china-this-is-what...

Super smog is the visible heath impact of economic 'growth'.

 

Mon, 10/21/2013 - 23:58 | 4078409 MeMadMax
MeMadMax's picture

Good.

This means china gets to deal with the wahoo wahoo camel-fuckers in the middle east...

 

>_>

Tue, 10/22/2013 - 06:11 | 4078679 negative rates
negative rates's picture

It means somebody is an idiot for not balancing the equasion. We export gulf oil to south america and import european oil to new england and parts of the west coast are importing oil. And mostly due to regulations from the gvt.

Tue, 10/22/2013 - 09:47 | 4078806 Urban Redneck
Urban Redneck's picture

He put a hedge word in there: "current" policy, China's current currency manipulation policy is consistent with its current currency position, just as their future currency manipulation policy will be consistent with their future currency position.

Mon, 10/21/2013 - 21:54 | 4078087 vxpatel
vxpatel's picture

you are so cynical...the saudi royals are a model royal family. there are only a few hundred, or maybe a thousand, corrupt princes out of a few thousand princes.

Tue, 10/22/2013 - 00:30 | 4078452 g'kar
g'kar's picture

After all the saudi's did to insure 9-11 was a success the gubmint owes them deeply.

Tue, 10/22/2013 - 00:48 | 4078465 Element
Element's picture

 

 

"So long as the U.S. has Saudi Arabia's back with its insanely superior military, ..."

 

Tell it to South Vietnam. The US is still struggle to cope with a 60 year old AK-47 and the RPG7, and IED's made out of hardware shop items, and phone spare parts. The US military is anything but insanely superior, look what happened to its RQ-170. What the US has is a whole series of digital Achilles Heels. Asymmetric conflict is also digital.

Tue, 10/22/2013 - 04:44 | 4078639 NidStyles
NidStyles's picture

I've noticed that the American Exceptionalism is the deepest in the military advocates. It's like they simply can not understand that a good military only exists as long as you have the public to draw from that is committed and strong enough to carry the load. The US hasn't had that since about late 2007. I was still in and saw the degradation of troops that were coming in during that period. It wasn't pretty.

The people that would make good soldiers now a days are mostly with the Libertarian crowd. You know the survivalist types that can adapt to a hard lifestyle that the military requires. Most of the mealy mouthed pansies in the military now are not worth the spit a camel can chew up.

The US military now wouldn't be able to handle a protracted fight, and the Politicians know it. It shows that they know it as they have been sticking to missile attacks and sending the only worthy souls in the forces into those zones, the CIA assets and ODA's. It's only a matter of time before the ODA's start rebelling. Sure they brought a lot of fresh Fascist meat into the teams in the past 10 years, but the old-school CSM's are still kicking around Bragg. They are still the last ones those little assholes see before they earn that beret. Here's to hoping they are filtering the turds and wieners out, or at least setting them straight.

 

Mon, 10/21/2013 - 21:39 | 4078041 GMadScientist
GMadScientist's picture

SDR as reserve currency with gold and Yuan added to the weighted basket.

Mon, 10/21/2013 - 21:47 | 4078065 LetThemEatRand
LetThemEatRand's picture

I was a big believer in this not too long ago, but I've come around.  Who would the Chinese sell their shit to if they had a strong currency?  I think the Chinese know that fiat in general is massively dilluting and they are positioning themselves accordingly for the long game, but I'm not sure it's in China's economic interest for another few decades at least to try to compete with anything but cheap labor.

Mon, 10/21/2013 - 21:51 | 4078077 BrocilyBeef
BrocilyBeef's picture

You may just have to pay to play when China is the only country to source certain goods. 

+1 if China can grab Taiwan.

Mon, 10/21/2013 - 23:00 | 4078259 LetThemEatRand
LetThemEatRand's picture

I hear you, but if you have to pay to play then why wouldn't America just start building factories again?  I see the end game as cheap labor globally and oligarch playground.   The oligarchs have gone Galt.  Bear in mind that Alan Greenspan, the architect of the New World Order that is coming into place, co-wrote with her.  When there's a new currency, it will be issued by the IMF which has no borders and is not controlled by individuals elected by the population, and that happens to be controlled by the same unelected people who control the Fed.

Tue, 10/22/2013 - 08:17 | 4078836 Urban Redneck
Urban Redneck's picture

It takes AT LEAST a decade to build an industrial infrastructure (plenty of time adapt & overcome).

Whether you are talking about the (non-ghost) cities in China, Jubail & Yanbu in KSA, or the UAE these things took decades to build both for the physical infrastructure and the HUMAN infrastructure, but alas the sheeple were glued to their boob-tubes and didn't see it coming.

How does one breed two useless eaters to produce a skilled worker?

Mon, 10/21/2013 - 22:58 | 4078286 merizobeach
merizobeach's picture

'Grabbing Taiwan' is not particularly easy.  China's 'United Front' campaign is positioning the country for the three traditional forms of warfare against Taiwan--military, economic, and diplomatic.

The military 'solution' would require a dedication of nearly all military assets, and a conflict longer than two weeks would drain China's oil reserves if new supplies were not forthcoming; furthermore, it would likely result in very heavy losses associated with an occupation--although that could be a positive for China if their human losses were primary conscripted infantry from the ranks of the hundred million wife-less, property-less men of fighting age; China has nearly 2000 mobile-launch cruise missiles aimed at Taiwan, a 2.5:1 advantage in other aerial assets, and a 70:1 advantage in citizenry.  It would be a possibly successful conquest if Japan and the US did not intervene, though it would also likely require the destruction of most of Taiwan's infrastructure.  Adding Taiwan then would not be a financial or industrial boost but just a face-saving matter of pride and vengence.

The economic warfare front is making more progress, with great encouragement given to Taiwanese businesses to invest their capital in China, subjecting Taiwan to the process of Detroitification, if still a couple decades behind.  The IMF's two official reasons for not including the CNY in the SDR was that there is not enough CNY cash in circulation and that not enough countries trade in it; that is certainly changing here, as banks now offer CNY savings accounts in addition to USD and TWD (NTD).  Personally, I think a QE program of some direct CNY spending cash into the pockets of each Taiwanese citizen once a year for a few years might be enough to win over some hearts.  Which leads to the last point..

The most successful arm of China's campaign so far has been its diplomatic efforts.  They have been buying off Taiwan's political allies, progressively isolating Taiwan internationally.  They have made secret deals with Taiwan's absolutely corrupt ruling party--the original Chinese Nationalists who mismanaged China so badly that they lost it to the communists--to effectively sell Taiwan to the government of China.  It's important to realize that many of Taiwan's ruling politicians, including its dispicable president, were actually born in China and consider themselves Chinese.  Offering them a chance to be buried in their motherland with historical distinction for mending the 'brief Chinese schism', along with a fat pay-out, has proven an easy sell.  The delivery schedule is well underway, with baby-steps taken in all directions: the eliminating of investment restrictions in China, the opening of Taiwan to Chinese tourists, then investors, the opening of Taiwan's markets to toxic Chinese food products, etc.  As I correctly predicted five years most of the steps that have transpired, there are still several that haven't yet; so look forward to: allowing full, direct Chinese ownership of businesses in Taiwan, perhaps beginning with tourism-related enterprises like hotels, then watch for scaling back of restrictions on Chinese workers coming to Taiwan, then observe how Taiwanese people won't be hired for (read: allowed) jobs in Chinese-owned hotels; expect more closed-door negotiations on opaque trade deals, more clamping down on local protests, more flagrant disregarding of referendums proposed by the opposition, the initiation of military trust-building cooperative consultations, and eventually a landmark, mass media-hyped, peace treaty and 'Security and Prosperity Agreement' which will effectively cede Taiwan's sovereignty to China.  As an aside, it is interesting to note how many Taiwanese military generals and other officers have already defected to China or are in jail for treason and espionage; it's no wonder Obama has not agreed to sell the F-16C/Ds and other systems, just as his very first military briefing as president warned him not to do.

The most shocking thing of it all to me is how little the average Taiwanese person seems to understand and value freedom.  I hope they won't have to lose it to develop such an appreciation.

Mon, 10/21/2013 - 23:07 | 4078310 merizobeach
merizobeach's picture

All of that said, with regard to China internally, cheap labor has been the driver of their growth, but with labor costs rising 20% per year, many factories are already relocating to Vietnam and Lao.  China's epic record-pace rise could also accelerate them into the collapse that the west is experiencing in a similarly shortened time span.  If the industrialized nations are following a gradual bell curve of prosperity, then China ought to as well, with the downside slope proportionally steeper, just as was the upside slope.

Tue, 10/22/2013 - 02:22 | 4078567 FreedomGuy
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Last I read, as many as 500,000 Taiwanese are living in and doing business with China. The fourth way is to simply absorb their population and productive capacity. Taiwanese have actually been an important part of China's success. Taiwanese have been the excellent bridges between the economically retarded old school communist Chinese and the rest of the world. The Taiwanese had the business and production expertise as well as cultural bridges that China needed. They could get rich/er in partnerships and exploiting new markets in China.

As far as the value of freedom, it seems common to all of the West, as well. It is taken for granted which is why it may be lost.

Tue, 10/22/2013 - 06:22 | 4078691 Fire Angel
Fire Angel's picture

I live in Taiwan, and I must say: This is absolutely outstanding analysis. You nailed it. Completely spot-on. 

Fire Angel

Wed, 10/23/2013 - 04:27 | 4082029 merizobeach
merizobeach's picture

Cheers, dude.

Just after I finished typing that spiel, I went out for dinner and read the Taipei Times; seems it may be farm workers before hotel workers:

http://www.taipeitimes.com/News/editorials/archives/2013/10/22/2003575076

Mon, 10/21/2013 - 22:14 | 4078166 Bro of the Sorr...
Bro of the Sorrowful Figure's picture

between hong kong, taipei (theyll make a move on taiwan eventually), and the new free trade zones in shanghai and beijing, id say china is trying to have it both ways. keep cheap labor going in poor peripheral areas and focus wealth in a small number of already highly developed areas.

Mon, 10/21/2013 - 23:34 | 4078366 lewy14
lewy14's picture

And by hollowing out formerly prosperous areas and destroying the middle class, Washington is emulating Beijing from the other direction...

Tue, 10/22/2013 - 00:52 | 4078470 Element
Element's picture

The other thing is how is an IMF SDR credible in any way shape or form as a currency? SDRs are an extension of the US buck that backs the IMF's very existence. For sure national identity and sovereignty in trade will mean national currencies are not going to be replaced by mere SDRs.

Tue, 10/22/2013 - 07:53 | 4078787 LongMarch
LongMarch's picture

Oh don't be silly. CNBC will say it's credible, an so it will be.

/sarc

Mon, 10/21/2013 - 22:26 | 4078199 SWRichmond
SWRichmond's picture

I believe they will try that first it will last ten or fifteen years and then that will fall apart too because they'll be seen to be printing too many SDR.  the world will be watching for it, the media will be denying it, and we will be treated to another one of these ridiculous cycles of using printed money to transfer wealth

Tue, 10/22/2013 - 01:09 | 4078494 ebworthen
ebworthen's picture

Not advocating the Yuan, just an observation of the trend.

What will the U.S. do when the debt is $34 Trillion and no one will buy our bonds?

China is spending a great deal of time and money building an advanced military, including their Navy.

Tue, 10/22/2013 - 04:48 | 4078641 NidStyles
NidStyles's picture

I doubt the US government will last that long. I bet around $25T there will be some "issues". If it even makes it that far.

Mon, 10/21/2013 - 21:37 | 4078033 FreedomGuy
FreedomGuy's picture

Whle all the enviro's hate oil...actually fossil fuels in general it is a huge improvement in the environment for the Chinese. See the stories on Harbin today.

Mon, 10/21/2013 - 21:40 | 4078043 GMadScientist
GMadScientist's picture

Gasoline is better than a coal-burning train, but that's by degrees, at best.

Mon, 10/21/2013 - 21:38 | 4078036 DCFusor
DCFusor's picture

So I guess me driving my solar-charged Volt really is a bad thing?

Mon, 10/21/2013 - 21:38 | 4078038 GMadScientist
GMadScientist's picture

A whole mess of Hydro power from dams, that's what's next.

 

Mon, 10/21/2013 - 21:40 | 4078042 CrashisOptimistic
CrashisOptimistic's picture

Look, this guy starts out laying things on the table in a solid factual way, and then sashays over to "the reason this happened was blah blah blah" with none of the blahs being AMERICAN JOBLESSNESS.

Blah blah blah paradigm shift and blah blah blah per capita consumption and who is buying cars.

This is sunny skies crap. 

Here is what is going to happen.  China's domestic oil production (unmentioned by the guy) is going to fall.  China will indeed scramble around to secure external oil sources for their growing per capita consumption. 

And then America's growing oil production will rollover and resume its natural, normal decline.

AT WHICH POINT -- America will need foreign oil and China will already have long term contracts to burn it.  American lifestyle will decline, and because it's all fungible, so will China's.  Eventually, someone -- some patriot -- will decide it is in his own country's best interests to recognize that when the pie is getting smaller you have to take someone else's slice.

Mon, 10/21/2013 - 21:53 | 4078083 DCFusor
DCFusor's picture

I think you win the internet today.

Mon, 10/21/2013 - 23:08 | 4078311 Flakmeister
Flakmeister's picture

Playng the long game is what is good for society as a whole, the ones playing the short game in order to line their pockets in the here and now are the real problem...

Tue, 10/22/2013 - 06:33 | 4078700 falak pema
falak pema's picture

According to energy browser site  2012 statistics: 

China : Oil consumption 10 MM B/D; Production : 5 MMB/D, Imports : 5 MM B/D; Projections 2020 imports : Increase to 9 MMB/D.

USA : Cons : 18; Prod : 10; Imports : 8;  Projections 2020 Imports : 6 

Brazil : Cons : 3; Produc: 1; Imports : 2; Projections 2020 Imports : 0 But consumption rises to 5 all provided by local increase.

With the Libra field coming onstream.

Yes its the LT that counts and China + Brics will be much bigger, while USA and EU stay in doldrums.

It will show up in the global power game and money games.

As USD fiat pump  is killing finance, the energy thread will resuscitate true wealth elsewhere. Tipping times.

The only real question is : Does Oppenheimer's deadly toy still act as restraint to all out global war; while accelerating the continuing trend for local asymmetric ones engineered by Oligarchs in their grab of regional riches?

Mon, 10/21/2013 - 23:40 | 4078378 Totentänzerlied
Totentänzerlied's picture

All this resource-scrambling has been taking place for years, and of course it will continue for quite some time (while everything comes undone). As it stands, China is in no position to enforce or protect most of its claims and trade, scattered around the world. The US, having had a century of practice, is in a much better position militarily (of course this too shall pass, but not without a grand finale).

Variables: How long the petrodollar system and dollar currency reserve status hold (giving an enormous advantage to the US), how useful gold will be for settling international trade, the existence of nations foolish/greedy enough to switch to Yuan for trade, China's success with coal and nuclear for base-load generation, adoption of natgas et al in either country.

As the old normal becomes more and more unsustainable, they will simply tighten their grip, until war, which solves many problems for all nations, and as poetic justice, greatly accelerates the destruction of all remaining cheapish oil.

"Lifestyle decline" is at best a euphemism for acute population contraction - through war, poverty, famine, whatever.

Mon, 10/21/2013 - 23:26 | 4078205 Spastica Rex
Spastica Rex's picture

Everybody in America is driving Teslas.

Mon, 10/21/2013 - 22:40 | 4078231 robertocarlos
robertocarlos's picture

I'll drive a Fisker Karma with a Corvette engine.

Mon, 10/21/2013 - 22:50 | 4078262 are we there yet
are we there yet's picture

Buy Exxon (XOM) for long term value. They are well positioned world wide in oil, good dividend as well.

Tue, 10/22/2013 - 01:01 | 4078482 Flakmeister
Flakmeister's picture

They are doing so great that short of calling tar oil they have been unable to replace reserves over the last decade...

OXY is the best oil play of the majors....

Tue, 10/22/2013 - 04:55 | 4078643 NidStyles
NidStyles's picture

I agree with you, after looking at their financials. Now I feel dirty.

Mon, 10/21/2013 - 23:31 | 4078362 Atomizer
Atomizer's picture

One first has to breakdown what currency was used to buy this wad of crude. Then the story can either be make or break spin fest.

Mon, 10/21/2013 - 23:41 | 4078382 syntaxterror
syntaxterror's picture

Looks like we've found the perferct market to sell our gass guzzlers to.

Tue, 10/22/2013 - 00:11 | 4078428 disabledvet
disabledvet's picture

i think oil has become irrelevant actually. refined products and natural gas is a whole 'nother story however. "you don't power skycraper City with oil." that's nuclear power on a large scale. KNDI had a spectacular day today...but they're primarily a networking company. building that out to scale will be a truly monumental solution...but it is the penultimate solution to the problems of mass transit. wonderful business model...have loved the company....if you've got ten ground lying around with nothing to do with it i'd be a buyer.

Tue, 10/22/2013 - 01:19 | 4078505 PGR88
PGR88's picture

What's next?  Let them invade Mid East countries once in a while now.

 

the USA can't have all the fun.

Tue, 10/22/2013 - 01:23 | 4078512 reader2010
reader2010's picture

John D. Rockefeller's eternal dream has finally come true. Thank you, Chinaman.

Tue, 10/22/2013 - 01:40 | 4078529 Son of Loki
Son of Loki's picture
"The Eiffel Tower, the Arc de Triomphe and rows of Parisian-style houses - all recreated in one extraordinary gated community in China. Tianducheng was built to house 100,000 of China's wealthiest citizens but the enormous complex has only 2,000 inhabitants at present after it opened in June."

 

http://ca.finance.yahoo.com/photos/paris-made-in-china-replica-of-the-fr...

Tue, 10/22/2013 - 02:55 | 4078579 Rogue Economist
Rogue Economist's picture

What is next is the Chinese will need to start importing Air and Water to go along with the Oil Imports.  Then they will need to start Exporting Dead Bodies.

The Chinese are TOAST.

RE

Doomstead Diner

Tue, 10/22/2013 - 03:04 | 4078582 Expat
Expat's picture

First of all this is the kind of hyperventilating, over-hyping headline associated with Business Insider or CNBC.  Chinese oil imports are hardly new and their moving to number one is not newsworthy in itself.  I grant that it is more eye-catching and easier for most people to understand, but it leads to false or exagerrated conclusions.

A site like this should instead link to articles explaining overall changes in BRIC oil consumption and OECD oil consumption.  China's appetite is not new nor is the converse reason for their new position as number one importer.  The US is producing a decent amount of (silly) shale oil but also reducing its gasoline consumption through a combination of fewer miles being driven and displacement of oil by ethanol.

And after my pedantic diatribe, I concur with Rogue Economist.  The Chinese Miracle is one in the sense that it will be a miracle for any Chinese who survive the next thirty years.  They, like the Soviets before them, are killing their environment.  I boldly predict that China's population will be about 750 million by 2043.

Tue, 10/22/2013 - 06:47 | 4078721 falak pema
falak pema's picture

bold you are and double posted bold you stay, thanks for predicting the 750 number. 

Nostradamus has a son.

Tue, 10/22/2013 - 03:04 | 4078583 Expat
Expat's picture

First of all this is the kind of hyperventilating, over-hyping headline associated with Business Insider or CNBC.  Chinese oil imports are hardly new and their moving to number one is not newsworthy in itself.  I grant that it is more eye-catching and easier for most people to understand, but it leads to false or exagerrated conclusions.

A site like this should instead link to articles explaining overall changes in BRIC oil consumption and OECD oil consumption.  China's appetite is not new nor is the converse reason for their new position as number one importer.  The US is producing a decent amount of (silly) shale oil but also reducing its gasoline consumption through a combination of fewer miles being driven and displacement of oil by ethanol.

And after my pedantic diatribe, I concur with Rogue Economist.  The Chinese Miracle is one in the sense that it will be a miracle for any Chinese who survive the next thirty years.  They, like the Soviets before them, are killing their environment.  I boldly predict that China's population will be about 750 million by 2043.

Tue, 10/22/2013 - 03:48 | 4078609 Notarocketscientist
Notarocketscientist's picture

THE FRACKING PONZI SCHEME

Robert Ayres, a scientist and professor at the Paris-based INSEAD business school, wrote recently that a "mini-bubble" is being inflated by shale gas enthusiasts. “Drilling for oil in the U.S. in 2012 was at the rate of 25,000 new wells per year, just to keep output at the same level as it was in the year 2000, when only 5,000 wells were drilled."  http://www.forbes.com/sites/insead/2013/05/08/shale-oil-and-gas-the-contrarian-view/

 

Why America's Shale Oil Boom Could End Sooner Than You Think

http://www.forbes.com/sites/christopherhelman/2013/06/13/why-americas-shale-oil-boom-could-end-sooner-than-you-think/

 

FRACKING WILL CREATE AN ECONOMIC CRISIS

Overinflated industry claims could pull the rug out from optimistic growth forecasts within just five years.  A report released in March by the Berlin-based Energy Watch Group (EWG), a group of European scientists, undertook a comprehensive assessment of the availability and production rates for global oil and gas production, concluding that: "... world oil production has not increased anymore but has entered a plateau since about 2005."  Crude oil production was "already in slight decline since about 2008."

 http://www.guardian.co.uk/environment/earth-insight/2013/jun/21/shale-gas-peak-oil-economic-crisis 

Tue, 10/22/2013 - 05:09 | 4078652 BrerRabbit
BrerRabbit's picture

It means they'll be needing to send their military to protect their foreign supplies. And who's gonna do anything about it? The big O?

Tue, 10/22/2013 - 06:24 | 4078695 orangegeek
orangegeek's picture

But the Chinese go down to the rivers and harvest the floating pigs and export those - so it all evens out.

Tue, 10/22/2013 - 07:15 | 4078749 quikwit
quikwit's picture

"I'm your biggest customer now.  Why are we still trading in their currency?"

Tue, 10/22/2013 - 10:34 | 4079357 merizobeach
merizobeach's picture

"You know that we hate them as much as you do; but they built us, and they would, as they have promised, un-build us if we fuck with them.  And you know that, too. ...  Alright, fine, we'll take those fucking UST, but you'd better not collapse their shit until we get paid."

Tue, 10/22/2013 - 07:32 | 4078760 Sufiy
Sufiy's picture

Next is Gold and Copper:


Gold catalyst: China aiming for 'de-Americanised world’ with renminbi replacing dollar 


The Telegraph reports about the long term plan for China to diversify out of US Dollar denominated assets. UK trade delegation was recently visiting China and making a lot of deals with the message that "we would like to be the part of The Growing China Story".    It is interesting that Alasdair Macleod is quoted by the mainstream UK paper now. The mega trend and major geopolitical shift is making it to the surface now, US Dollar is losing its status of Reserve Currency Of Choice. With this perspective in mind China's appetite for Gold, Copper, Lithium and other commodities is making a lot of sense. http://sufiy.blogspot.co.uk/2013/10/gold-catalyst-china-aiming-for-de.html#

Tue, 10/22/2013 - 10:37 | 4079362 merizobeach
merizobeach's picture

[Chuckle.]  Another well-meaning commenter who didn't read ZH yesterday. 

Tue, 10/22/2013 - 07:45 | 4078777 shovelhead
shovelhead's picture

Let's suppose for a minute that oil exporters within and without OPEC decide that oil will only be traded with a 40% ratio of gold.

Qui Bono?

US or China?

Where is all this cheap gold being sold coming from?

 

Tue, 10/22/2013 - 08:12 | 4078820 youngman
youngman's picture

In Brazil yesterday they had a "failed" oil auction of a huge tract....only 4 outside compánies bid..2 were chinese...that is what the Chinese will do ..is buy production now...all over tte world...

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